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Assignment: Currency Options
Recently currency options are the new popular form of hedging. Use the Internet to locate a currency options calculator. Use the information in the chart below and calculate a currency option.
Detail
Amount
Domestic Currency
USD
Foreign Currency
EUR
Option Type
Call
Interest Rate
5%
Spot price
$1.57 cents
Spot Date
6/12/2012
Principle
200,000
Strike Price
Create this price
Expiration Date
7/12/2012
Volatility
2%
Research on the Internet and the Rasmussen research databases and write a 1 to 2 page paper that:
• Explains the option you calculated.
• Describes how hedging can be of advantage or disadvantage to the option.
• Use APA formatting for any citations and reference page.
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